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He Appealed to My Greed

Posted on December 23, 2013 by

A few months back, one of our rental properties went vacant.  It’s a nice three-bedroom, two-bath home with a fenced yard.  After a bit of paint and clean up, we stuck a For Rent sign on the lawn.

Over the course of two weeks, we received several great applications.  One application stood out above all the others.  The applicants had been on their jobs for years, they had solid references, they had the move-in funds ready to go, and they kept their current residence immaculate.  They would make PERFECT tenants!

Shortly before I called these ideal tenants to give them the good news that they got the house, I got a call from someone who wanted to buy the property.  They explained that their credit stunk, but they had $10,000 to put down.

Their $10,000 down payment got my attention and put the brakes on everything.  A thorough background check revealed that the prospective buyers didn’t pay their bills or maintain their current residence well.

Over coffee, the potential buyers explained that they had just inherited $20,000, had always wanted their own home, loved the house we had on the market, and buying it – if we gave them owner financing – would be a dream come true. Read More→

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But I Don’t Have the Money

Posted on December 23, 2013 by

Is real estate a good, safe, profitable investment?  Consider this: More millionaires have made their fortunes using real estate as their primary investment over any other investment vehicles – including stocks and bonds.

With real estate, an average American with no college education can buy a house – often at less than 50 cents on the dollar – with little or none of his own money, get great tax breaks, and here’s the best part: have his tenant (or buyer) pay for it all!

Can you name any other investment that can match these benefits?  No?  So then why aren’t a lot more folks investing in real estate?  Why do so many people choose to be realtors instead of investors – lord knows, investing pays a lot more!

The answer to these questions is best summed up by the excuse most would-be investors give: “I’d love to invest in real estate, but I don’t have the money, and the bank won’t loan me a dime.”  Folks, this is one lame, stinkin’ excuse! 

Rarely do Kim and I go to banks for our purchase funds.  In fact, since 2005, we can count on three fingers the total number of loans we’ve gotten from banks to do our deals.  So how are we paying for them? Read More→

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I’m A Failure…Or Am I?

Posted on December 23, 2013 by

Last month, I did a knocking-on-sellers’-doors challenge.  To help folks better understand what real estate investing is really like, I posted my daily results on North Georgia REIA’s Facebook page – including pictures and many of the creative offers I structured!

For the month, I spent 9 days out getting face-to-face with sellers.  In total, I talked to 30 sellers at the door, 27 invited me in, and I made 23 written offers – including a $1 million offer on a $125,000 house!

Yesterday, I spoke with an investor who followed me on Facebook.  He said, “If I had been you, I would never have done a public challenge.” “Why not?” I asked.  He answered, “Because you talked to all those sellers but didn’t find a single deal.  Now everyone is gonna think you’re nothing more than a big, fat, ball-headed failure!” Read More→

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A Barrel Full of Fishhooks

Posted on November 26, 2013 by

Last Friday, I took Michele, a new real estate investor, out knocking on sellers’ doors.  Hers was a very, very special case that touched my heart.

Recently, Michele lost her husband.  This caused her to fall into financially troubled times.  In an attempt to dig out of the I-don’t-have-any-money pit, she attended one of those “free” real estate investing dog-and-pony shows that come to town regularly.

Michele went to the seminar hoping to find an “easy” way to make “lots” of “quick” cash.  Don’t you know – this is exactly what their course promised!  Because Michele didn’t have the $20,000 cash needed to pay for the special “mentoring” package, she chose to raid her retirement account – the last money she had on earth – to buy the “guru’s” package.  In other words, she willingly dove headfirst into a barrel of fishhooks!

Before you roll your eyes, know this: Over the years, I’ve met thousands of people who have made similar decisions!  Why do you think those dog-and-pony shows continue to come to town? 

Michele’s intentions were good – she was simply looking for a way out of her financial mess.  She honestly believed she was trading her $20,000 for $1 million dollars. Read More→

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Making the Impossible Deals Possible

Posted on October 30, 2013 by

A realtor asked me to talk about a real-world example of a recent deal we did that demonstrates how we make impossible deals possible.  No problem, but I ask one favor: As I describe the homeowner’s situation, BEFORE you read how we structured the deal, think about how YOU would have done it!

The seller had a three-bedroom, two-bath home in Acworth, Georgia.  The property needed zero work – it was beautiful!  Fair market value was $60,000.  His mortgage balance was $92,000 – making him $32,000 upside-down in the property.  The home would rent for $850 per month.  His mortgage payment was $925 per month – a $75 negative cash flow.  At the time, the home was vacant and costing the owner over $1,000 per month.  The financial drain was killing him.  One last thing: The owner HATED tenants!  His last two tenants all but destroyed his investment property.

The owner just wanted done, but he wouldn’t consider doing a short sale or letting the home go back to the bank.

Can you make this impossible deal possible?  What if I told you that structured creatively, this deal will make you $200 per month, risk-free…with a tens-of-thousands-of-dollars bonus at the end?  Please take a few minutes to structure this deal.  Read More→

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The Objective is a Written Offer

Posted on October 22, 2013 by

A common mistake made by real estate investors is to forget why they knock on the seller’s door. By “forget,” I don’t mean the seller answers the door and the investor stands there with a stupid, lost look on his face.  I mean the investor doesn’t understand the basic objective of why he’s there.

Do you know the ultimate objective of meeting with sellers?  I mean, why are you there?  What’s the purpose?  Is it to be given a tour of the seller’s house?

Recently, I was working with a couple of investors.  By “working,” I mean I was watching and critiquing – the investors had the lead and were responsible for what happened in the house.  We went in the first seller’s house and got the grand tour.  In the end, the investors told the seller they’d get back with him, then left.  Same thing happened in the second seller’s house.

One of the hardest things about teaching is for the teacher to keep his mouth shut.  Oh, do I ever have a problem with this!  Not immediately correcting someone when they’re doing something wrong practically makes my eyes bleed.

Before going in the third seller’s house, I asked the investors, “When y’all are all done talking to the seller and are ready to leave, will you please ask if I have anything else to add?” Read More→

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One thing that REALLY sticks in my craw is the number of folks who claim that all I do is make low-ball offers when making offers to buy houses.  Kim and I have heard this nonsense for more than 18 years. 

Want the truth?  Can you handle the truth?  Almost every offer I make includes a full-price offer!  Don’t believe me?  I’m in the middle of a 30-day knocking-on-sellers’-doors challenge.  So far we’ve talked to 25 sellers at the door; 22 have invited us in and we’ve made 18 written offers.  You can see us in action – along with a number of full-priced written offers that we’ve made – by going to North Georgia REIA’s Facebook page.

Last week, I met with a realtor and a seller at the seller’s house.  Before I got there, the realtor told the seller that this would be a total waste of her time.  She said, “Bill’s nothing more than a scum-sucking bottom feeder.  All he does is make insulting, way-below-market offers.”  But here’s the thing: I had never met this realtor, nor made a single offer to one of her sellers – EVER! Read More→

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Silence is a Form of Acceptance

Posted on October 16, 2013 by

Yesterday, I attended the Board of Assessor’s monthly meeting at the county courthouse.  Including me, the total number of private citizens in the room was…one!  This isn’t unusual. I attend several of these meetings each year – usually around property tax time – and I’ve never seen anyone else there except for the folks on the board.

For the record, board members are appointed by county government officials.  The members work hard and have a lot of responsibility on their shoulders.  Their job is to review property tax appeals, sales ratios and changes to the tax digest.  Before a decision is rendered, there’s a lot of open, back-and-forth discussion.

At the meeting, I learned that around 2,000 property owners filed property tax appeals – this is about the same number as last year.  I was dumbstruck that so few had filed an appeal.  Because Steve Taylor, the County Commissioner – who has one T-O-U-G-H job – recently announced plans for a 25% property tax increase, I figured there would be a flood of property tax appeals. Read More→

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How Kim Spent Her Summer Vacation

Posted on October 15, 2013 by

“Bill, you have a pretty big spot on your lung.  We’re not sure what it is,” said the doctor. If he wanted to get my attention, he succeeded!

I’ve never smoked, I compete in five triathlons and do several 100-mile bike races each year, plus I go to the gym twice a week – yet there I was, wondering whether I had lung cancer.

The good news is that it wasn’t lung cancer! It turns out that the spot on my lung is a result of me having had tuberculosis when I was growing up in Thailand.  No matter, the thought of dying caused me to look at many parts of my life – including our rental properties.

For most couples who own single-family rentals, one spouse is primarily responsible for taking care of the properties and tenants.  In our family, it’s me.

My health scare raised some all-important questions: What would happen to our rental properties if I suddenly died?  Would Kim know what to do?   Could she maintain our capital assets or would she be forced to liquidate all of our investment properties? 

I decided we needed to find out the answer to these questions. Read More→

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Dinner With The Millionaire Next Door

Posted on October 5, 2013 by

Have you ever made a TOTAL fool of yourself – when you were least expecting to? Read on, and learn how I stepped square in the middle of it!

Last night, one of my lifelong friends – Mary Ann Doering – invited Kim and me over to a small dinner party she was having for her neighbors.  Mary Ann is a wordsmith and the woman who proofs my columns.

As much as I like and appreciate Mary Ann, I did NOT want to go to her dinner party.  Frankly, any get-together that doesn’t include real estate investors, capitalists and financial-freedom seekers bores me to tears.  No matter – Kim made it clear that we WOULD be attending.  What I didn’t know was that Mary Ann was setting me up BIG TIME!  She was about to pull off her best practical joke on me EVER!

We got to Mary Ann’s before the other guests arrived.  A few minutes later, the doorbell rang.  Prior to the couple walking in, Mary Ann whispered, “I barely know these people.  They’re pretty boring from what I remember.”  GREAT, I thought: Now I’m really glad I came.

After meeting “Tim” and “Jane,” I began doing what I always do – asking questions.  At one point, Mary Ann mentioned that she was rereading The Millionaire Next Door by Tom Stanley.   Tim asked, “Who is Tom Stanley?” Read More→

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Pete FortunatoI’ve written a weekly real estate investing newspaper column for more than ten years. During this time, we’ve looked at all kinds of creative deal structures and financing…but what exactly are these?

The easiest way to tell you what creative deal structuring is, is to tell you what it’s NOT. It’s not finding a house to buy at fair market value and then going to an institutional lender to get a traditional mortgage. That said, about everything else is creative deal structuring and financing.

The best deal structurer I know is Pete Fortunato. He has been one of our three primary real estate investing teachers since 1999. (The other two are Dyches Boddiford and Jack Miller.) Over the years, we’ve taken almost every seminar Pete has taught – every time he has taught it!

Pete Fortunato's Benefits HouseMuch of our real estate investing knowledge comes from Pete. My biggest ah-hah Pete moment was seeing a picture of his Benefits House for the first time. These days, that picture hangs on the wall in front of my desk. Whenever considering a deal, I look at it and contemplate different ways the deal can be done. Read More→

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One of the biggest mistakes we continually see real estate investors make is buying a rental property that produces a NEGATIVE monthly cash flow.  When it comes to rental properties, positive cash flow is much more important than equity!

Here’s a typical example: An investor buys a single-family rental for $90,000.  The property will rent for $725 per month and have mortgage payments of $485.  The investor thinks: Wow, the property will produce a positive monthly cash flow of $240 – boy will I be sitting pretty.

But what about little expenses such as property taxes, insurance, repairs, vacancies, and management?  When you factor these costs into the equation you suddenly find yourself knee deep in a pit of money-losing quicksand.

Always remember that investors make their profit – including positive cash flow – when BUYING the property.  For a deal to be profitable, it’s critical that you know all the numbers and structure it accordingly. Read More→

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